Electric vehicles (EVs) are becoming cheaper along with the cost
of lithium-ion batteries, and their market share is expected
to increase. The International Energy Agency's Global EV outlook 2017 estimates that there are already two million EVs
on the road worldwide, with China and the United States taking the lead,
followed by Japan, Norway, and the Netherlands. Still boosted by subsidies
in many jurisdictions today, it won't be too long until EVs will become
price-competitive on their own (see my blog Volvo goes electric). The EV30@30 Campaign, supported by
the Clean Energy Ministerial working group, aims for a 30% market
share of EVs by 2030.

As EVs become more popular, are electric vehicles (EV) always cleaner
than conventional gasoline or diesel vehicles, and always cleaner
than hybrid-electric vehicles? The answer, put simply, is:
electric vehicles are only as clean as the electricity they
use. If electricity is generated mostly from coal, EVs are not
necessarily cleaner.

In a recent and very influential paper Holland et al. (2016) asked
the question "Are there environmental benefits from driving electric
vehicles?" in response to the generous subsidies that are offered for
EVs in the United States at the federal level and by individual
states. They are careful to include all types of emissions, both
global pollutants (carbon dioxide) as well as local pollutants
(nitrogen oxides and others). As EVs charge from the local grid, which
is broadly divided into three major interconnections in the United
States, EVs draw on electricity that ranges from broadly clean (in the
west) to broadly dirty (in the east). All included, they find that in
some jurisdictions subsidizing EVs is beneficial as it further helps
reduce local pollution, while in others EVs should actually be taxed
because charging them increases pollution from dirty power plants.
Charging EVs also generates much larger spatial spillovers. Whereas
driving a conventional internal-combustion engine vehicle pollutes
your local environment, charging EVs can trigger pollution far away
as power plants in distant corners of the grid provide power.

The situation is generally more advantageous in Canada, where a
larger share of electricity is generated from hydro power than in the
United States. But not all provinces are equally clean. Alberta's,
Saskatchewan's, and Nova Scotia's electricity still makes use of a lot
of coal (68%, 51%, and 64% in 2015, respectively). Ontario has phased
out coal and only uses about 12% natural gas. The rest is from
carbon-free sources including wind, sun, nuclear, and hydro.

Exactly how dirty can electricity be for EVs to remain superior
to gasoline-engine vehicles or hybrid-electric vehicles? It is useful
to carry out a few simple back-of-the-envelope calculations to
illustrate the feasible range. Let us focus only on carbon dioxide
and set aside local pollutants for the moment. As Holland et al. (2016)
shows, taking local pollutants into account fully sets the bar higher
for EVs. To begin with, a typical gasoline-powered car emits about
250 grams of CO2 per kilometer, and a typical hybrid-electric
vehicle about half that. Electric vehicles require about 0.25 kWh per km,
and a simple approximation of the CO2 output of
power plants is to use the share of coal and natural gas.
The average coal plant has emissions of about 900 grams of CO2 per
kWh, and the average natural gas plant about 400. An EV that was powered
solely by coal would thus emit 225 grams of CO2 per kilometer,
while electricity solely from natural gas would bring this number down to 100.
With this information it is easy to conclude that EVs ares always cleaner
in terms of CO2 than a conventional gasoline-only vehicle
(225 is a bit less than 250). EVs don't always win out against hybrid-electric
vehicles everywhere.

The ternary
diagram below shows the composition of electricity with respect to
the share of coal and natural gas, with the remainder (labeled
"renewables") capturing all carbon-free sources. This type of diagram
is very useful for showing three variables in two dimensions. Every
point in the diagram represents a different composition. The point at
the top of the triangle marks where all generation is
carbon-free. Moving down on the left side (and the red lines)
increases the share of coal, and moving from left to right on the
bottom side (and the blue lines) increases the share of natural
gas. At the bottom left all generation is from coal, and at the bottom
right all generation is from natural gas. Finally, moving up along the
right side (and the green horizontal lines) increases the share of
carbon-free electricity sources.

Several provinces are marked in the ternary diagram. Low-carbon provinces such as BC and Ontario hover at the top of the diagram. The provinces that rely much on coal—Alberta (AB), Saskatchewan (SK) and Nova Scotia (NS)—are clustering in the bottom left of the diagram. In these three provinces, driving a hybrid-electric vehicle will remain the better choice than driving an EV. The green and yellow areas show where EVs and hybrids are cleaner, respectively. If electricity was purely from natural gas, EVs would still be less CO2-intensive than hybrids. As soon as the share of coal exceeds 20%, however, EVs are at risk of becoming more CO2-intensive than hybrids. When the share of coal rises above 50%, it's pretty much game-over for EVs.

The calculations above are rather simplistic, but they capture the gist
of the problem. Promoting EVs makes sense in places where electricity is relatively clean. However, where electricity still relies on a lot of coal, hybrid-electric vehicles are the better option to promote. Public policy should carefully adjust promotional programs to take the composition of electricity generation into account.